3. journal entries

GOOD MORNING!!

Reminder: A business transaction is anytime that an exchange of value happens within the normal operation of a business Every transaction must be recorded Every transaction affects at least two accounts

Up to now: We have been using T-Accounts Debits = Credits

The owner invests $20 000 into the business

Cash T. Rantula, Capital

20 000 20 000

The concepts of “T-Accounts” remain Debits = Credits At least two accounts are affected

But rather than entering transactions into the T-Accounts immediately, we use the General Journal

Your personal diary

The textbook says: “The journal records all parts of a transaction in

one place. The date, the debit, the credit and an explanation for each transaction are recorded together.”

Can record manually or electronically

Think of the stereotypical girl that enters her thoughts into a journal every night before bed

The accountant loves to get his/her thoughts and feelings (transactions) into his/her journal as soon as something happens within the business.

ADVANTAGES The complete transaction is recorded in one

place Reduces Errors

Easier to make a mistake in T-Accounts (Debit but no credit, only one account, etc)

Transactions are listed in chronological order Shows a picture of every day at the business

This unit is all about the different steps of the accounting cycle

The accounting cycle is the process an accountant goes though during a fiscal periods Begins with a business transaction Ends with the preparation of the Financial

Statements & Closing Entries

Date Particulars Pr

DR CR

Summarize each transaction with words and as short as possible Example: Owner invested cash Example: Made cash sale of tickets Example: Bought equipment on account

THIS IS A MUST FOR EACH AND EVERY TRANSACTION!

An increase in amount:

Debit Credit

Assets

Drawings

Expenses

Liabilities

Owner’s Equity

Revenue

A decrease in amount:

Debit Credit

Liabilities

Owner’s Capital

Revenue

Assets

Drawings

Expenses

Account DEBIT CREDIT

Assets

Liabilities

Owner’s Equity

Drawings

Revenues

Expenses

On October 1st the owner, T. Rantula invests $20 000 into the business

On October 4th the business sold $16 000 worth of tickets

Date Particulars Pr

DR CR

Oct 1 Cash 20 0 0 0 00

T. Rantula, Capital 20 0 0 0 00

Invested additional cash

4 Cash 16 0 0 0 00

Ticket Sales 16 0 0 0 00

Ticket sales for the week

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